The “Elastic Bounce Strategy” is a put credit spread strategy when the market is crashing. This strategy generated a 1,056% return with a 94% win rate since 2003. That’s an average yearly return of 62.61% by following this step by step strategy. So, if you want to make over 50% a year even if you work full-time or don’t know anything about put credit spreads, keep reading 🙂
Let me set the scene and define some terms before getting into the strategy…
Put credit spreads are a strategy that makes money when the stock goes up, stays the same or goes down slightly. This is a very reliable and predictable strategy when you trade it correctly. It is typically used by traders to grow their account and generate a consistently side income.
Crashing is when the market is experiencing a double digital percentage downturn in a few days (according to Investopedia). When the market is crashing, things can be scary and unpredictable. You can predict how low a stock will drop using standard deviation. That’s why this strategy works because the stock breaches the expected support quickly then immediately bounces up. Using credit spreads, we can profit on that bounce up.
Referencing the image above, you can see a few important things on this stock chart. When the stock crosses below the bottom yellow line, the stock is hitting it’s low and in the bounce zone. When the stock is bouncing, we follow the rules for the “Elastic Bounce Strategy” which are listed below.
The Elastic Bounce Strategy — Instructions To Have A 94% Win Rate
- Wait for the stock to cross below the bottom yellow line ( -3.8 standard deviations of the 200 day moving average )
- Determine your short strike price for the put credit spread ( stock close price x 96% )
- Determine your expiration date ( current date + 14 days then round up to the next Friday )
- Setup the trade in your broker (sell to open the short strike price, buy to open the strike price below the short price, and use the expiration determine above)
- Ensure you are collecting at least .15 in credit for placing the put spread
- If you can collect .15, officially place the trade
The key lesson here: trade credit spreads in the direction of the trend!
** If you want to get alerts sent straight to your phone when this setup happens or want access to my personal trade alerts that have over a 94% win rate, then check out the 10% Credit Spread Inner Circle Program **
Put Credit Spreads, on average depending on the delta you use, have a 70–80% win rate! However, you can increase that win rate to 94% when you trade the Elastic Bounce Credit Spread Strategy! If you want to learn more or have any questions, reach out via email at email@example.com.
Thanks for reading 🙂
CEO & Chief Strategy Officer